FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended Commission File Number
September 27, 1996 0-9708
SUPER 8 MOTELS TEXAS, LTD.
(Exact name of registrant as specified in its charter)
State of Organization TEXAS IRS Identification No.
74-2062237
P. O. Box 969, Rockwall, TX 75087-0969
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 771-6783
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
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SUPER 8 MOTELS TEXAS, LTD.
(A Limited Partnership)
September 27, 1996
CONTENTS
PART I. FINANCIAL INFORMATION Page
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets 3
Statement of Operations
Three Months ended September 27, 1996 and
September 29, 1995 4
Statement of Operations
Nine Months ended September 27, 1996 and
September 29, 1995 5
Statement of Partners' Equity 6
Statement of Cash Flows
Nine Months ended September 27, 1996 and
September 29, 1995
7
Notes of Financial Statements 8 - 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS
10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDING
10
ITEM 2. CHANGES IN SECURITIES
10
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
11
ITEM 5. OTHER INFORMATION
11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
11
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SUPER 8 MOTELS TEXAS, LTD.
(A Limited Partnership)
BALANCE SHEETS
September 27, 1996 and December 29, 1995
ASSETS
1996 1995
Unaudited
CURRENT ASSETS
Cash $ 17,771 $ 48,744
Accounts Receivable, net of
allowance for doubtful
accounts of $4,223 in 1996
and $3,898 in 1995 83,158 59,923
Prepaid expenses 28,674 20,802
Total current assets 129,603 129,469
PROPERTY AND EQUIPMENT
Land 769,800 769,800
Building and improvements 2,539,443 2,539,443
Furniture and equipment 471,032 408,990
3,780,275 3,718,233
Accumulated Depreciation 1,140,512 1,038,302
2,639,763 2,679,931
OTHER ASSETS 27,676 38,272
$ 2,797,042 $ 2,847,672
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Current portion of mortgage payable$ 45,000 $ 45,000
Accounts payable 76,410 64,701
Sales tax payable 32,731 34,953
Property taxes payable 28,418 37,060
Accrued compensation 20,305 22,735
Accrued interest payable 1,295 1,887
Total current liabilities 204,159 206,336
MORTGAGE PAYABLE, less current portion 293,088 326,838
PARTNERS' EQUITY 2,299,795 2,314,498
$ 2,797,042 $ 2,847,672
The accompanying notes are an integral part of this
statement.
SUPER 8 MOTELS TEXAS, LTD.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED
September 27, 1996 and September 29, 1995
(Unaudited)
1996 1995
AVERAGE ROOM RATE $ 36.19 $ 35.07
OCCUPANCY PERCENTAGE 70.5% 74.3%
Revenues
Room rentals 292,512 298,591
Other 15,515 15,375
308,027 313,966
Expenses
Departmental:
Rooms 106,443 95,966
Other 5,543 6,752
General and
administrative 56,170 59,030
Sales 11,541 13,341
Franchise fees 24,866 26,350
Utilities 31,424 24,919
Maintenance & Repair 33,697 28,099
Management fees 12,080 14,520
Depreciation 34,070 34,811
Amortization 702 702
Property taxes 10,024 11,537
Insurance 8,108 11,893
Interest 9,341 11,098
344,009 339,018
NET INCOME (LOSS) $ (35,982) $ (25,052)
The accompanying notes are an integral part of this statement.
SUPER 8 MOTELS TEXAS, LTD.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE NINE MONTH PERIODS ENDED
September 27, 1996 and September 29, 1995
(Unaudited)
1996 1995
AVERAGE ROOM RATE $ 37.22 $ 34.80
OCCUPANCY PERCENTAGE 78.9% 74.5%
Revenues
Room rentals 1,010,236 892,188
Other 45,863 41,879
1,056,099 934,067
Expenses
Departmental:
Rooms 326,472 291,200
Other 18,109 19,235
General and
administrative 183,219 172,852
Sales 35,732 31,323
Franchise fees 85,986 74,132
Utilities 86,002 75,273
Maintenance & Repair 97,456 77,990
Management fees 50,861 44,698
Depreciation 102,210 104,433
Amortization 2,108 2,108
Property taxes 29,572 34,611
Insurance 23,228 29,253
Interest 29,847 34,487
1,070,802 991,595
NET INCOME (LOSS) $ (14,703) $ (57,528)
The accompanying notes are an integral part of this statement.
SUPER 8 MOTELS TEXAS, LTD.
(A Limited Partnership)
STATEMENT OF PARTNERS' EQUITY
FOR THE NINE MONTH PERIODS ENDED
September 27, 1996 and September 29, 1995
(Unaudited)
General Limited
Partners Partners Total
Balance - December 30, 1994 $ (17,844) $2,392,618 $2,374,774
Net Income (Loss) - Three
Months Ended
March 31, 1995 (56) (5,526) (5,582)
Net Income (Loss) - Three
Months Ended
June 30, 1995 (269) (26,625) (26,894)
Net Income (Loss) - Three
Months Ended
September 29, 1995 (251) (24,801) (25,052)
Balance - September 29, 1995 $ (18,420) $2,335,666 $ 2,317,246
Balance - December 29, 1995 $ (18,446) $2,332,944 $ 2,314,498
Net Income (Loss) - Three
Months Ended
March 29, 1996 174 17,187 17,361
Net Income (Loss) - Three
Months Ended
June 28, 1996 39 3,879 3,918
Net Income (Loss) - Three
Months Ended
September 30, 1996 (360) (35,622) (35,982)
Balance - September 27, 1996 $(18,593) $ 2,318,388 $ 2,299,795
The accompanying notes are an integral part of this statement.
SUPER 8 MOTELS TEXAS, LTD.
(A Limited Partnership)
STATEMENT OF CASH FLOWS
Nine Months Ended September 27, 1996 and September 29, 1995
(Unaudited)
1996 1995
Cash flows from operating activities
Net income (loss) $ (14,703) $ (57,528)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in) operating
activities
Depreciation and amortization 104,318 106,541
Change in operating assets and
liabilities
Accounts receivable (23,235) (4,976)
Prepaid expenses (7,872) (9,906)
Other assets 8,488 2,299
Accounts payable 11,709 6,619
Sales tax payable (2,222) 3,080
Property taxes payable (8,642) (233)
Accrued compensation (2,430) (8,236)
Accrued interest (592) (239)
Net cash provided by
(used in) operating
activities 64,819 37,421
Cash flows from financing activities
Payments made on mortgage payable (33,750) (33,750)
Net cash provided by
(used in) financing
activities (33,750) (33,750)
Cash flows from investing activities
Property additions (62,042) (6,607)
Collections on note receivable 9,062
Net cash provided by
(used in) investing
activities (62,042) 2,455
NET INCREASE (DECREASE) IN
CASH (30,973) 6,126
Cash at beginning of year 48,744 803
Cash at end of period $ 17,771 $ 6,929
Interest paid during the period $ 30,439 $ 34,726
The accompanying notes are an integral part of this statement.
SUPER 8 MOTELS TEXAS, LTD.
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the
preparation of the accompanying financial statements follows.
Depreciation
Depreciation is provided in amounts sufficient to relate the cost of
depreciable assets to operations over their estimated service lives by
the straight-line method. Accelerated methods of depreciation are used
for tax purposes.
Federal Income Taxes
Federal income taxes (benefits) are not reflected in the financial
statements as the partners individually report their distributive shares of
the taxable income or loss of the Partnership.
Fiscal Year
The Partnership's fiscal year ends on the Friday nearest December 31.
Fiscal years 1996 and 1995 are comprised of fifty-two week periods.
NOTE B - PARTNERSHIP AGREEMENT
The Partnership was formed under the laws of the State of Texas in
September 1979. The Partnership was organized to develop and operate
nonspecified "budget" hotels in Texas.
Allocation of cash distributions and income (losses) are 99% and 1%,
respectively, to limited partners and general partners.
The general partners have an option which expires in 1999 to purchase a
special 20% limited partner interest for $500,000.
Franchise Fees
Effective June 30, 1994, the partnership received approval from Ramada
Franchise Systems, Inc. to operate the facility as a Ramada Limited hotel
for a term of fifteen years subject to Ramada having the right to
terminate the license without cause effective on the fifth anniversary of
the license. Prior to June 30, 1994, the Partnership paid to Super 8
Motels, Inc. monthly fees equal to 4% of its gross room revenue and
contributed an additional 1% of its gross room revenues to an
advertising fund administered by the franchisor. Effective June 30,
1994, the Partnership will pay to Ramada Franchise Systems, Inc.
monthly fees equal to 3.5% of its gross room revenue for the first twelve
months from the effective date of the Ramada license and 4% of its gross
room revenue beginning in the thirteenth month through the balance of
the license term. In addition, the partnership must contribute 4.5% of
its gross room revenue to Ramada Inter-National Association for
marketing, reservation systems and other assessments. Franchise fees
were $85,986 and $74,132 for the nine months ended September 27,
1996 and September 29, 1995, respectively.
NOTE C - RELATED PARTY TRANSACTIONS
Management Fees
An affiliate of one of the former General Partners managed the hotel for
the Partnership until May 31, 1989. The fee for this service was 5% of
gross operating revenues from Partnership operations. This management
fee was payable monthly; however, three-fifths of the management fee
was deferred until receipt by the Limited Partners of a cumulative 10%
per annum pre-tax return on their adjusted capital contributions. During
1994 this obligation was written off because it was determined that it
was unlikely to require payment in the future.
On June 1, 1989, an affiliate of one of the current General Partners
assumed management of the hotel. For its services, the management
company receives a base management fee equal to the greater of three
percent (3%) of the Gross Revenues of the hotel or $36,000 per year. In
addition to the base management fee, the management company receives
an incentive management fee equal to ten percent (10%) of Gross
Operating Profit. For the nine months ended September 27, 1996 and
September 29, 1995, management fees were $50,861 and $44,698,
respectively. Additionally, accounting service fees paid to another
affiliate of a general partner were $21,000 and $19,500 for the nine
months ended September 27, 1996 and September 29, 1995,
respectively. Expense reimbursements to a general partner for expenses
incurred were $9,587 and $6,278 for the nine months ended September
27, 1996 and September 29, 1995, respectively.
NOTE D - SIGNIFICANT CUSTOMER
The Partnership's revenues for the nine months ended September 27,
1996 and September 29, 1995 include amounts from a single customer
of approximately $95,078 and $81,000, respectively.
NOTE E - MORTGAGE PAYABLE
In April 1994, the partnership entered into a mortgage note agreement to
borrow $450,000 from a financial institution. The proceeds of this loan
were used to complete the renovation of the facility to comply with the
Ramada license requirements. Under terms of the agreement, the
partnership is required to make monthly principal installments of $3,750
and interest on the outstanding principal balance at 2% above the
financial institution's prime lending rate. The mortgage note is
collateralized by the hotel's property and equipment. As of September
27, 1996, the outstanding principal balance was $338,088, with a
current portion of $45,000. All unpaid principal is due in 2004. The
payee may demand payment of the outstanding balance of the note on the
six year, seven year, eight year and nine year anniversary dates of the
note.
SUPER 8 MOTELS TEXAS, LTD.
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Opinion of Management
In the opinion of management, the accompanying unaudited financial
statements reflect all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial position as of
September 27, 1996 and September 29, 1995, and the results of
operation and its cash flows for the periods then ended.
Liquidity
The General Partners believe that the Partnership's liquidity, defined as
its ability to generate adequate amounts of cash to meet its cash needs, is
satisfactory. The Partnership's primary source of liquidity is its revenue
from operations, the cash provided from the sale of its restaurant in 1990
and the proceeds of the mortgage note incurred to finance the renovation
of the hotel. The Partnership actively negotiated with the lessee of the
restaurant building to sell the building to such lessee. Such sale took
place on September 14, 1990. The contract sale price was $500,000.
This sale provided a cash infusion to the property of $445,000 which
was used to pay off delinquent taxes of $137,605, current taxes on the
restaurant through September 14, 1990 of $14,160 and a $22,000 bank
loan secured by the lease. As of September 27, 1996, the Partnership
had cash and other current assets in the amount of $129,603 compared to
$111,242 at September 29, 1995. Current liabilities were $204,159 at
September 27, 1996, compared to $199,293 at September 29, 1995.
Capital Resources
The partnership spent approximately $6,600, $451,000 and $5,900 in
capital improvements to the hotel's facilities in 1995, 1994 and 1993,
respectively. The partnership has spent $62,042 in capital improvements
to the hotel during the first six months of 1996. The hotel is now
operating in full compliance with the Ramada Limited standards.
Results of Operations
The Partnership's hotel average occupancy rate for the nine month
period ended September 27, 1996, was 78.9% compared to 74.5% for
the nine month period ended September 29, 1995. The average daily
room rate for the nine month period ended September 27, 1996, was
$37.22 compared to $34.80 for the nine month period ended September
29, 1995. Room Revenue for the nine month period ended September
27, 1996 was $1,010,236 compared to $892,188 for the nine month
period ended September 29, 1995.
The airline employee and airline related lodging resulted in daily room
rentals of approximately 41.0% of the hotel's 126 rooms for the nine
month period ended September 27, 1996, compared to 45.0% for the
nine month period ended September 29, 1995.
SUPER 8 MOTELS TEXAS, LTD.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings.
Item 2. CHANGES IN SECURITIES
There have been no changes in securities for the nine months ended
September 27, 1996.
Item 3. DEFAULTS UPON SENIOR SECURITIES
There are no senior securities and accordingly, there are no defaults for
the nine months ended September 27, 1996.
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY
HOLDERS
No matter was submitted to a vote of security holders for the nine
months ended September 27, 1996.
Item 5. OTHER INFORMATION
There is no other information to report for the nine months ended
September 27, 1996.
Item 6. EXHIBITS AND REPORT OF FORM 8-K
There are no exhibits or reports on Form 8-k to be filed with this Form
10-Q.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUPER 8 MOTELS TEXAS,
LTD.
(REGISTRANT)
S/S
Martin J. Cohen, General
Partner
